Crude oil prices surged on Boxing Day. WTI crude oil CFDs initially traded lower during the Asian session and bottomed at $61.08. The commodity then steadily traded higher to a new three-month high at $61.84. By the end of the New York session, crude oil prices had settled at $61.75.
Risk appetite picked up in yesterday’s trading thanks to updates on the US-China phase one deal. According to a spokesperson for China’s Ministry of Commerce, they are in the process of finalizing the initial agreement announced earlier this month. There were also reports that China is preparing for a signing ceremony. It’s worth noting that this was the first time that the country has acknowledged that a phase one deal has been agreed on.
Today, the commodity will likely take its cue from the inventories report due at 4:00 pm GMT. It is expected to show a 1.7 million barrel-shortage of oil. A lower-than-expected figure will likely have a bullish effect on crude oil prices because it suggests that the US may soon ramp up its demand for the commodity.
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On the daily time frame of WTI crude oil CFDs, we can see that the commodity is trading above resistance of the falling trend line (from connecting the highs of April 23 and September 16). If there are enough buyers in the market in the last few days of December, we could see crude oil prices re-test their September 17 highs at $63.32.
On the other hand, a close below the trend line could mean that the rally is losing steam. A bearish candle closing at $60.86 may mean that crude oil prices may soon fall to test support at the 100 SMA at $57.60.